Urban Land Ceilings Act

Urban Land Ceilings Act (ULCA) plays important role in driving housing prices in India. Despite being a developing country, India has high real estate prices as compared to other markets. It is because of low developed area and high demand due to population. As the per capita income grows in India, the real estate prices will explode if there is no proper regulation. The government has passed ULCRA which further increased the shortage of land. The parliament passed the law in 1976 with an objective to generate social equality. It also meant to prevent businesses to make enormous profits from real estate sector.

Urban land available in India is still governed by this law. It also regulates the urban congestion in the Indian cities. The ceiling depends upon in what type of city you are buying the property. The act divides Indian cities into A, B and C categories. The provision of the law decides the upper limit for the usage of land accordingly. The ULCA basically put the limit on the availability of the land. When the developer went in the market to buy a land for new project, the owners started charging ridiculously high prices. Hence the housing prices increased in India. The act started affecting negatively to the industry. The Maharashtra government now has decided to scrap the act for affordable housing now.

The ULCA scrapping can stabilize the real estate sector in Indian cities. The price drop won’t be immediate but it will take time to drop the prices. The uniform supply of cheap land will make affordable housing a reality. The experts from the industry suggest that this will trigger mass housing projects in many suburban areas. ULCA scrapping will save lot of money for builders which they can use to reduce prices or create better projects. The land development permission required under ULCA also takes tremendous amount of time and money. The basic aim of ULCA act haven’t been fulfilled due to the act itself. The projects like Jawaharlal Nehru National Urban Renewal Mission was not being implemented due to the act.

The move released 36,000 hectares of land in the state of Maharashtra itself. The Mumbai city will get an opportunity to use 5,200 hectares of land. But it won’t be available immediately due to various legal disputes. The view about ULCA have been divided. Builders and real estate developers want it gone as it will speed up the projects. But activists want the act to stay for meaningful state intervention. Independent housing policy is better way to give housing to urban poor instead of act like ULCA. The policy should give incentives to private and public players to build housing for low and middle income groups.

The prime land in important areas needs to be released and scrapping ULCA is only way to go. The projects would be built at fast rate as well. The main aim of the ULCA was to allow government to implement land based social welfare schemes in Indian cities but now we have strong private sector to do that.